6 The Key to Recovery

In a statement published in the Melbourne Herald of 16 January 1935 Prime Minister Lyons stressed his Government's commitment to private enterprise as the 'chief agency' for ending unemployment.

The Prime Minister disdained unorthodox methods of 'credit expansion', considering that any such experimentation could have only a detrimental effect on the national economy. Sound methods of finance, he said, engendered the confidence that made it possible to borrow large sums of money at low rates of interest. Therefore, any program of public works would be funded by orthodox means. As far as possible, those works would be selected for their reproductivity.

It is significant that the Prime Minister qualified his statement about reproductivity. Previous experience had shown that few relief works were fully reproductive under the definition the Commonwealth Bank Board had tried to enforce. The approved schemes – for water supply and sewerage installation, along with some road and rural development projects – were labour intensive and, it could be argued, provided immediate financial returns on the sums invested.

Although capable of providing work for a large unskilled labour force, afforestation schemes had not previously been considered as properly reproductive because their financial returns could be delayed for decades. However, a national afforestation plan was discussed at a conference of State and Commonwealth forestry officials held in Melbourne in December 1934. Early in 1935 the Commonwealth Government sought and received submissions from the States on forestry projects to provide relief work for the unemployed. A national three-year afforestation plan was subsequently established, with the Commonwealth subsidising the contributions made by the States (with the exception of South Australia and Tasmania) on a pound-for-pound basis.

The plan met with the wholehearted approval of State premiers, but as a condition of subsidising the States in this way, the Commonwealth Government stipulated that 20% of those selected for work in the forestry camps should be between the ages of 17 and 21 years. The reasons for this were twofold: to provide young unemployed men with material benefits, but also to remove them from depressed industrial environments where they could be susceptible to radical influences and to place them in work camps in remote rural areas where they were closely supervised.

If domestic politics is apparent in the establishment of afforestation camps, political developments overseas are reflected in legislation passed by the Commonwealth Parliament early in 1935 allocating funds to the long-neglected Department of Defence. For example, the Appropriations (Works and Services) Act 1934 provided £102 956 to Defence while the Loan Appropriations (Unemployment Relief) Act 1934 provided £41 235.

In his opening statement to a conference of selected employers and employee organisations on 22 January 1935, the Prime Minister emphasised his Government's view that while a supportive public works program was needed, it should at no time compete with private enterprise. He continued by saying that the only permanent solution to unemployment lay in the stimulation of primary and secondary industries, with the practical pursuit of that outcome being the stated object of the conference. In reality, as Schedvin has pointed out, market forces rather than any deliberate policy on the part of the Lyons Government would largely determine the scale and rate of Australia's economic recovery.24

As a result, some 300 000 Australians remained unemployed in 1935 (compared to a peak of 500 000 in 1932–33), of whom only about 55 000 were in receipt of relief work.25

A contemporary observer of the Great Depression found that in New South Wales as the numbers of those out of work decreased in 1935, the average period of unemployment experienced by individuals increased considerably. And, while the number of those engaged in relief work declined by 23% during the financial year 1935–36, the number of those receiving relief in the form of food rations rose by 7%. This led him to conclude:

It is an unwritten law that the effects of economic maladjustment shall be borne in the first place by those unfortunate individuals for whom no place can be found in the productive process...It is now a commonplace that, even in the most prosperous times, there are not enough jobs to employ all the working population.

But A G Colley was writing in 1939. Total war would soon alter that situation.26